Feeling the squeeze of the economic downturn, three out of four 401(k)
participants (72 percent) are likely not on track to meet retirement
goals based on their current 401(k) balance, plan contributions, and
projected Social Security, according to a new report by Financial
Engines, America's largest independent registered investment adviser.1
Of that 72 percent, Financial Engines projects that the typical
participant will be able to replace only 45 percent of their
pre-retirement income, compared to a 70 percent goal.2 On a
positive note, however, the report showed that participants in plans
with automatic enrollment and Qualified Default Investment Alternatives
(QDIAs) are better off than those without.

The 2010 Financial Engines National 401(k) Evaluation analyzed the
portfolios of more than 2.8 million 401(k) participants from 272
employer plans. The report estimates the amount of income each
participant can expect in retirement from their current 401(k) savings
and investments, and evaluates each portfolio on the basis of risk and
diversification, company stock and participant contributions. The
results show a 401(k) system under pressure from the recent economic
crisis but with signs of hope in the form of the automatic 401(k) and
plan sponsors designing plans that automatically enroll all participants
to get them started on the right track.

"This study is a wake-up call showing that employees continue to make
retirement mistakes, which have been compounded by the financial
crisis," said Jeff Maggioncalda, president and CEO of Financial Engines.
"Employers play a key role in ensuring that participants get the help
they clearly need."

The report also found that the economic downturn has had a negative
impact on participant savings rates, with 39 percent of participants not
saving enough to receive the full employer match, up from 33 percent in
2008. Of participants under age 40, 47 percent failed to save enough to
receive the full employer match. In addition, participants earning
between $25,000 and $75,000 per year had average lower 401(k) savings
rates in 2010 than they had two years ago (six percent in 2010 compared
to seven percent in 2008), reflecting the serious impact of the economic
crisis on middle-class working Americans.

According to the report, while automatic enrollment is helpful in
getting participants into the plan, automatic savings escalation
(automatically increasing participants' savings rates each year to an
upper limit) is key to getting them saving enough for retirement.
Sixty-seven percent of participants in plans with automatic escalation
save enough to receive the full employer match, compared to just 52
percent of participants in plans without automatic escalation.

Although the U.S. Department of Labor finalized the QDIA regulations as
recently as October 2007, the policy is already having a positive impact
on newer participants. Younger participants with lower salaries and
lower account balances are benefiting the most, as they are more likely
automatically enrolled into the plan with an age-appropriate QDIA. For
example, 52 percent of participants under age 30 in plans with a QDIA
have the appropriate risk and diversification for their age, compared to
just 12 percent of participants under 30 in plans without a QDIA. In
addition, 50 percent of participants earning less than $25,000 per year
in plans with a QDIA have age-appropriate risk and diversification,
compared to just 24 percent in plans without a QDIA.

This report highlights that unless they are re-enrolled in an
age-appropriate investment default, existing participants are not yet
benefiting from the automatic 401(k). According to the report, after
being re-enrolled in managed accounts, existing participants across all
age and salary groups are better off, with younger participants with
lower salaries and lower account balances benefiting the most. Plans
that have re-enrolled all participants in managed accounts have nearly
twice as many participants with age-appropriate risk and diversification
than plans without (57 percent vs. 31 percent).

"Public policy makers have provided a clear roadmap and incentives for
employers to implement automatic 401(k) features," said Maggioncalda.
"This study proves that automatic features are working, and the time has
come for employers to implement them for all participants."

For more information on the data sets analyzed and to download a copy of
the Financial Engines National 401(k) Evaluation 2010, please visit www.financialengines.com.

About Financial Engines, Inc.(NASDAQ:FNGN)

Financial Engines is the largest independent investment advisor
committed to providing everyone the trusted retirement help they
deserve. The company helps investors with their total retirement picture
by offering personalized retirement plans for saving, investment, and
retirement income. To meet the needs of different investors, Financial
Engines offers both Online Advice and Professional Management.
Co-founded in 1996 by Nobel Prize-winning economist Bill Sharpe,
Financial Engines works with America's leading employers and retirement
plan providers to make retirement help available to millions of American
workers. For more information, please visit www.financialengines.com.

2 The study did not evaluate the impact of defined benefit
income sources or previous 401(k) balances, if any, on participant
retirement readiness. It analyzes 401(k) plans only, and is not intended
to address participant investments outside of the plans offered by these
plan sponsors, including IRAs, Roth IRAs, other investment vehicles, or
additional 401(k) portfolios and pension plans at other employers not
included in the sample set. As a result, the analysis may not represent
investing of the total household portfolio.